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INTERNATIONAL INVESTORS IN AGRICULTURAL LAND SHOULD PREPARE FOR A BUYING
OPPORTUNITY IN THE UK The weakening of the pound against other major currencies as well as reducing land values in parts of the UK means non-sterling investors are well positioned to benefit from increasing buying power into the UK farmland markets.
Up until 2015, UK land prices experienced a bull run like no other. Farms that traded at the turn of the century at below £3,000 per acre were selling at the peak in 2015-16 for £8,000 - £10,000 or more. Driven in part by basic supply and demand (as shown on the graph below), favourable tax incentives as well as external investors (first from overseas farmers and then from UK high-net wealth and institutional investors) UK land values tripled in 15 years.
But such boom times may be over. Land values across the UK have come under pressure over the last 36 months, with most areas experiencing a reduction in value. The greatest impact has been felt in the “commercial” farming counties, found predominantly in the east of England. Here, a sustained period of lower commodity prices as well as continued uncertainty surrounding the future of the Common Agricultural Policy (CAP) and secure income streams post BREXIT, have had a negative influence on the price of farmland.
Figure 1: UK Land Supply and Average Land Values 400,000
Supply - hectares 350,000 25,000 300,000 20,000 250,000 200,000 150,000 10,000 100,000 5,000 50,000 0 0 15,000 Average land values - £ / hectare 30,000
Source: Farmers Weekly and RICS
28 | ADMISI - The Ghost In The Machine | May/June 2018
1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
Price (£ / - hectares
Supply - hectares
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